Jingle mail


Homeowners whose homes are losing value as their mortgage resets to much higher levels increasingly feel no need to tough it out. Instead, they just mail the keys back and walk away. This happens enough that it’s called ‘jingle mail.’

There have been so many foreclosures in Cleveland that parts of it now resemble a ghost town. When block after block of residential areas become empty, then businesses in the area suffer too. Tax revenue for the municipality drops, causing budget shortfalls. And so on.

In theory, when home prices drop enough, then speculators will move in, buying at the bottom. But if entire blocks are ravaged and no businesses are nearby, prices will have to drop way down indeed to attract the vultures.

It took parts of the South Bronx decades to come back.

Or will it be like the Anasazi in Temecula?

  • DJ

    That’s one reason I wonder about making Cancellation of Debt (COD) income nontaxable. It’s ALREADY non-taxable if you’re insolvent– and that’s almost everyone forced into foreclosure, because if they had the money they’d have paid it.

    The new law makes COD nontaxable for your principle residence even when you’re not insolvent. Why would we want to give people a tax break for walking away if they don’t have to?

  • As an exercise in psycho-history, I’ve been using the Anasazi abandonment model as the base micro-population in my, ahhhh… anticipations of the behavior pattern of the larger model as it applies to historical cyclical water patterns across the west, where water is a factor equally weighted as humans. Nice touch, that; haunting.

    The trouble with this statistical model is the answer is always ‘they’re gonna’ move here’.

  • It appears that plenty of people are abandoning their homes while they still have some money left, rather than pay reset mortgage rates they can’t afford as the home declines in value.

    And really, why shouldn’t they walk away? Staying would be even more financially ruinous.

    Yes, others also have opined there may be a reverse migration from the arid southwest back to northern states where there are still ample water supplies.

    Here in CT we were actually in a moderate drought, as defined by the government, in the summer and fall. Then the rain and snow came, we went to mild drought, then extremely dry, now it is officially over.

  • DJ

    On the off-topic of water, interestingly a local radio station aired a climate modeler and climate historian who both agreed that northern Utah would not only get warmer, but wetter as well. So the generalization that the entire southwest will dry out may not be accurate. (Unfortunately, I live in SOUTHERN Utah, which they said will NOT get wetter– but it may not get drier.)

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